UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| X | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30,
2014
| ___ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to ________
COMMISSION FILE NUMBER 000-54504
SaaSMAX, INC.
(Exact name of registrant as specified in its
charter)
NEVADA |
|
27-4636847 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
|
|
|
3254 Prospect Ave. |
|
|
La Crescenta, CA 91214 |
|
89052 |
(Address of principal executive offices) |
|
(Zip Code) |
|
|
|
(818) 249-1157 |
(Registrant's telephone number, including area code) |
|
|
|
Not Applicable |
(Former name, former address and former fiscal year, if changed since last report) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. X Yes ___No
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). X Yes ____ No
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act.
Large accelerated filer ___ |
Accelerated filer ___ |
Non-accelerated filer _ (Do not check if a smaller reporting company) |
Smaller reporting company X |
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). ___ Yes X No
Indicate
the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As
of August 19, 2014, the Registrant had 49,818,888 shares of common stock outstanding.
SaaSMAX, Inc.
For the quarter ended June 30, 2014
FORM 10-Q
|
Page
No. |
PART I. FINANCIAL INFORMATION |
1 |
Item 1. |
Financial Statements: |
1 |
|
|
Condensed Consolidated Balance Sheets (Unaudited) |
2 |
|
|
|
|
|
|
Condensed Consolidated Statements of Operations (Unaudited) |
3 |
|
|
|
|
|
|
Condensed
Consolidated Statement of Stockholders’ Equity (Deficit) (Unaudited) |
4 |
|
|
|
|
|
|
Condensed Consolidated Statements of Cash Flows (Unaudited) |
5 |
|
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements (Unaudited) |
6 |
|
|
|
|
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
11 |
|
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|
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
14 |
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Item 4. |
Controls and Procedures |
14 |
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|
PART II. OTHER INFORMATION |
15 |
Item 1. |
Legal Proceedings |
15 |
|
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|
|
Item 1A. |
Risk Factors |
15 |
|
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
17 |
|
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|
|
Item 3. |
Defaults Upon Senior Securities |
17 |
|
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|
Item 4. |
Mine Safety Disclosures |
17 |
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Item 5. |
Other Information |
18 |
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Item 6. |
Exhibits |
18 |
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Signatures |
19 |
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03
of Regulation S-X, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial
position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles.
In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial
position have been included and all such adjustments are of a normal recurring nature. Operating results for the six months ended
June 30, 2014 are not necessarily indicative of the results that can be expected for the year ending December 31, 2014.
As used in this Quarterly Report, the terms
“we,” “us,” “our,” “SaaSMax,” and the “Company” mean SaaSMax, Inc.
and its subsidiaries, unless otherwise indicated. All dollar amounts in this Quarterly Report are expressed in U.S. dollars, unless
otherwise indicated.
SaaSMAX, INC. |
(A Development Stage Company) |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
| |
| |
|
| |
June 30, 2014 | |
December 31, 2013 |
| |
| |
|
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash | |
$ | 296 | | |
$ | 4,670 | |
Total current assets | |
| 296 | | |
| 4,670 | |
| |
| | | |
| | |
Distributor agreement, net | |
| 50,139 | | |
| 56,250 | |
| |
| | | |
| | |
Total assets | |
$ | 50,435 | | |
$ | 60,920 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |
| | | |
| | |
| |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 69,329 | | |
$ | 37,631 | |
Loan payable - related party | |
| 20,000 | | |
| 10,000 | |
Total current liabilities | |
| 89,329 | | |
| 47,631 | |
| |
| | | |
| | |
Total liabilities | |
| 89,329 | | |
| 47,631 | |
| |
| | | |
| | |
Commitments and contingencies | |
| | | |
| | |
| |
| | | |
| | |
Stockholders’ equity (deficit) | |
| | | |
| | |
Preferred stock, $0.001 par value; 20,000,000 shares authorized; no shares issued and outstanding | |
| — | | |
| — | |
Common stock, $0.001 par value; 1,200,000,000 shares authorized; 49,818,888 and 58,818,888 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively | |
| 49,819 | | |
| 58,819 | |
Additional paid-in capital | |
| 1,083,886 | | |
| 1,074,886 | |
Deficit accumulated during development stage | |
| (1,172,599 | ) | |
| (1,120,416 | ) |
Total stockholders’ equity (deficit) | |
| (38,894 | ) | |
| 13,289 | |
| |
| | | |
| | |
Total liabilities and stockholders’ equity (deficit) | |
$ | 50,435 | | |
$ | 60,920 | |
| |
| | | |
| | |
See accompanying notes to the unaudited condensed consolidated financial statements | |
| | | |
| | |
SaaSMAX, INC. |
(A Development Stage Company) |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited) |
| |
| |
| |
| |
| |
|
| |
Three months ended June 30, | |
Six months ended June 30, | |
January 19, 2011 (inception) to June 30, 2014 |
| |
2014 | |
2013 | |
2014 | |
2013 | |
|
| |
| |
| |
| |
| |
|
Revenues | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Operating expenses | |
| | | |
| | | |
| | | |
| | | |
| | |
Professional fees | |
| 32,204 | | |
| — | | |
| 60,891 | | |
| — | | |
| 202,162 | |
Marketing | |
| — | | |
| — | | |
| — | | |
| — | | |
| 15,013 | |
General and administrative | |
| 4,776 | | |
| — | | |
| 10,042 | | |
| — | | |
| 40,469 | |
Total operating expenses | |
| 36,980 | | |
| — | | |
| 70,933 | | |
| — | | |
| 257,644 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net operating loss from continuing operations | |
| (36,980 | ) | |
| — | | |
| (70,933 | ) | |
| — | | |
| (257,644 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Other income | |
| | | |
| | | |
| | | |
| | | |
| | |
Gain on cancellation of Earn-Out Shares | |
| — | | |
| — | | |
| 18,750 | | |
| — | | |
| 18,750 | |
Total other income | |
| — | | |
| — | | |
| 18,750 | | |
| — | | |
| 18,750 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss from continuing operations | |
| (36,980 | ) | |
| — | | |
| (52,183 | ) | |
| — | | |
| (238,894 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Discontinued operations: | |
| | | |
| | | |
| | | |
| | | |
| | |
Loss from discontinued operations (including $0 from gain on disposal) | |
| — | | |
| (131,259 | ) | |
| — | | |
| (273,510 | ) | |
| (933,705 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
$ | (36,980 | ) | |
$ | (131,259 | ) | |
$ | (52,183 | ) | |
$ | (273,510 | ) | |
$ | (1,172,599 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Weighted average number of common shares outstanding - basic and fully diluted | |
| 49,818,888 | | |
| 53,120,436 | | |
| 53,050,932 | | |
| 53,156,436 | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss per share - Basic and fully diluted | |
| | | |
| | | |
| | | |
| | | |
| | |
From continuing operations | |
$ | (0.01 | ) | |
$ | — | | |
$ | (0.01 | ) | |
$ | — | | |
| | |
From discontinued operations | |
| — | | |
| (0.01 | ) | |
| — | | |
| (0.02 | ) | |
| | |
Net loss per share - basic and fully diluted | |
$ | (0.01 | ) | |
$ | (0.01 | ) | |
$ | (0.01 | ) | |
$ | (0.02 | ) | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
See accompanying notes to the unaudited condensed consolidated financial statements | | |
SaasMAX, INC. |
(A Development Stage Company) |
CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) |
Period from January 19, 2011 (inception) to June 30, 2014 |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Paid-In Capital |
|
Deferred Comp. Expense |
|
|
|
Accumulated Deficit During Development Stage |
|
|
|
|
Common Stock |
|
|
|
Founders' Receivable |
|
|
|
|
|
Shares |
Amount |
|
|
|
|
|
Total |
Balance, |
|
|
|
|
|
|
|
|
|
|
|
|
|
January 19, 2011 |
- |
$ - |
|
$ - |
|
$ - |
|
$ - |
|
$ - |
|
$ - |
Issuance of founders' shares - January 2011 |
36,000,000 |
36,000 |
|
|
|
- |
|
(36,000) |
|
- |
|
- |
Issuance of common stock for cash - February 2011 |
9,486,000 |
9,486 |
|
148,614 |
|
- |
|
- |
|
- |
|
158,100 |
Issuance of common stock for cash - March 2011 |
2,520,000 |
2,520 |
|
39,480 |
|
- |
|
- |
|
- |
|
42,000 |
Issuance of common stock for services - October 2011 |
1,200,144 |
1,200 |
|
18,802 |
|
- |
|
- |
|
- |
|
20,002 |
Deferred compensation expense - options |
- |
- |
|
3,122 |
|
(3,122) |
|
- |
|
- |
|
- |
Earned compensation expense - vested options |
- |
- |
|
5,523 |
|
- |
|
- |
|
- |
|
5,523 |
Net loss |
- |
- |
|
- |
|
- |
|
- |
|
(182,021) |
|
(182,021) |
Balance, |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011 |
49,206,144 |
49,206 |
|
215,541 |
|
(3,122) |
|
(36,000) |
|
(182,021) |
|
43,604 |
Issuance of common stock for cash - February 2012 |
2,571,432 |
2,571 |
|
72,429 |
|
|
|
|
|
|
|
75,000 |
Issuance of common stock for cash -April 2012 |
1,378,872 |
1,379 |
|
63,621 |
|
- |
|
- |
|
- |
|
65,000 |
Debt discount related to beneficial conversion feature |
- |
- |
|
125,000 |
|
- |
|
- |
|
- |
|
125,000 |
Deferred compensation expense - options |
- |
- |
|
- |
|
3,122 |
|
- |
|
- |
|
3,122 |
Earned compensation expense - vested options |
- |
- |
|
175,774 |
|
(8,491) |
|
- |
|
- |
|
167,283 |
Net loss |
- |
- |
|
- |
|
|
|
- |
|
(478,174) |
|
(478,174) |
Balance, |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012 |
53,156,448 |
53,156 |
|
652,364 |
|
(8,491) |
|
(36,000) |
|
(660,195) |
|
835 |
Debt discount related to beneficial conversion feature |
- |
- |
|
27,739 |
|
- |
|
- |
|
- |
|
27,739 |
Earned compensation expense - vested options |
- |
- |
|
- |
|
5,660 |
|
- |
|
- |
|
5,660 |
Cancellation of common stock for sale of subsidiary - July 2013 |
(25,880,448) |
(25,880) |
|
(1,052,472) |
|
- |
|
- |
|
- |
|
(1,078,352) |
Capital contribution related to sale of Subsidiary to related party |
- |
- |
|
1,086,797 |
|
- |
|
- |
|
- |
|
1,086,797 |
Sale of Subsidiary equity accounts to related party - July 2013 |
- |
- |
|
(33,000) |
|
2,831 |
|
36,000 |
|
- |
|
5,831 |
Issuance of common stock for Distributor Agreement - July 2013 |
300,000 |
300 |
|
12,200 |
|
- |
|
- |
|
- |
|
12,500 |
Issuance of common stock for conversion of debt - July 2013 |
9,642,888 |
9,643 |
|
215,357 |
|
- |
|
- |
|
- |
|
225,000 |
Issuance of common stock for management agreement - July 2013 |
18,000,000 |
18,000 |
|
732,000 |
|
- |
|
- |
|
- |
|
750,000 |
Deferred compensation |
- |
- |
|
(750,000) |
|
- |
|
- |
|
- |
|
(750,000) |
Proceeds from issuance of common stock for cash -August 2013 |
2,400,000 |
2,400 |
|
97,600 |
|
- |
|
- |
|
- |
|
100,000 |
Issuance of common stock for Payment of Promissory Note -August 2013 |
1,200,000 |
1,200 |
|
48,800 |
|
- |
|
- |
|
- |
|
50,000 |
Stock based compensation |
- |
- |
|
37,500 |
|
- |
|
- |
|
- |
|
37,500 |
Net loss |
- |
- |
|
|
|
- |
|
- |
|
(460,221) |
|
(460,221) |
Balance, |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013 |
58,818,888 |
58,819 |
|
1,074,886 |
|
- |
|
- |
|
(1,120,416) |
|
13,289 |
Cancellation of earn-out shares |
(9,000,000) |
(9,000) |
|
9,000 |
|
- |
|
- |
|
- |
|
- |
Stock based compensation |
- |
- |
|
18,750 |
|
- |
|
- |
|
- |
|
18,750 |
Gain on cancellation of Earn-Out Shares |
- |
- |
|
(18,750) |
|
- |
|
- |
|
- |
|
(18,750) |
Net loss |
- |
- |
|
- |
|
- |
|
- |
|
(52,183) |
|
(52,183) |
Balance, |
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014 |
49,818,888 |
$ 49,819 |
|
$ 1,083,886 |
|
$ - |
|
$ - |
|
$ (1,172,599) |
|
$ (38,894) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the unaudited condensed consolidated financial statements |
|
SaaSMAX, INC. |
(A Development Stage Company) |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited) |
| |
| |
| |
|
| |
Six months ended June 30, | |
January 19, 2011 (inception) to June 30, 2014 |
| |
2014 | |
2013 | |
|
| |
| |
| |
|
Cash flows from operating activities | |
| | | |
| | | |
| | |
Net loss | |
$ | (52,183 | ) | |
$ | — | | |
$ | (1,172,599 | ) |
Loss from discontinued operations | |
| — | | |
| (273,510 | ) | |
| 933,705 | |
Adjustments to reconcile net loss to net cash used in operating activities | |
| | | |
| | | |
| | |
Stock based compensation | |
| 18,750 | | |
| — | | |
| 56,250 | |
Gain on cancellation of Earn-Out Shares | |
| (18,750 | ) | |
| | | |
| (18,750 | ) |
Depreciation and amortization | |
| 6,111 | | |
| — | | |
| 12,361 | |
Changes in operating assets and liabilities | |
| | | |
| | | |
| | |
Accounts payable and accrued expenses | |
| 31,698 | | |
| — | | |
| 69,329 | |
Net cash used in operating activities - continuing operations | |
| (14,374 | ) | |
| (273,510 | ) | |
| (119,704 | ) |
Net cash provided by (used in) operating activities - discontinued operations | |
| — | | |
| 174,420 | | |
| (494,781 | ) |
Net cash used in operating activities | |
| (14,374 | ) | |
| (99,090 | ) | |
| (614,485 | ) |
| |
| | | |
| | | |
| | |
Cash flows from investing activities | |
| | | |
| | | |
| | |
Purchase of distribution agreement | |
| — | | |
| — | | |
| (50,000 | ) |
Payment for discontinued operations | |
| — | | |
| — | | |
| (7,131 | ) |
Net cash used in investing activities - continuing operations | |
| — | | |
| — | | |
| (57,131 | ) |
Net cash used in investing activities - discontinued operations | |
| — | | |
| (35,154 | ) | |
| (88,188 | ) |
Net cash used in investing activities | |
| — | | |
| (35,154 | ) | |
| (145,319 | ) |
| |
| | | |
| | | |
| | |
Cash flows from financing activities | |
| | | |
| | | |
| | |
Proceeds from loan payable - related party | |
| 10,000 | | |
| — | | |
| 20,000 | |
Proceeds from issuance of common stock | |
| — | | |
| — | | |
| 150,000 | |
Net cash provided by financing activities - continuing operations | |
| 10,000 | | |
| — | | |
| 170,000 | |
Net cash provided by financing activities - discontinued operations | |
| — | | |
| 125,000 | | |
| 590,100 | |
Net cash provided by financing activities | |
| 10,000 | | |
| 125,000 | | |
| 760,100 | |
| |
| | | |
| | | |
| | |
Net increase (decrease) in cash | |
| (4,374 | ) | |
| (9,244 | ) | |
| 296 | |
| |
| | | |
| | | |
| | |
Cash, beginning of period | |
| 4,670 | | |
| 16,375 | | |
| — | |
| |
| | | |
| | | |
| | |
Cash, end of period | |
$ | 296 | | |
$ | 7,131 | | |
$ | 296 | |
| |
| | | |
| | | |
| | |
Supplemental disclosure of cash flow information: | |
| | | |
| | |
Income taxes paid | |
$ | — | | |
$ | — | | |
$ | — | |
Interest paid | |
$ | — | | |
$ | — | | |
$ | — | |
| |
| | | |
| | | |
| | |
Supplementary disclosure of noncash financing activities: | |
| | | |
| | |
Net liabilities on transfer of Subsidiary | |
$ | — | | |
$ | — | | |
$ | 8,445 | |
Issuance of common stock for Distribution Agreement | |
$ | — | | |
$ | — | | |
$ | — | |
Cancellation of shares of common stock | |
$ | 9,000 | | |
$ | — | | |
$ | 1,078,352 | |
Issuance of common stock for conversion of debt | |
$ | — | | |
$ | — | | |
$ | 127,739 | |
| |
| | | |
| | | |
| | |
See accompanying notes to the unaudited condensed
consolidated financial statements | | |
|
SaaSMAX, INC.
(A Development Stage Company)
Notes to the Condensed Consolidated unaudited
Financial Statements
June 30, 2014
NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
SaaSMAX, Inc. (“SaaSMAX”, the “Company”,
“we”, “us” or “our”) was incorporated on January 19, 2011 (“Inception”) under the
laws of the State of Nevada. Through the end of June 2013, SaaSMAX developed and launched an online global business-to-business
marketplace for software-as-a-service providers, resellers and users. On July 1, 2013, the Company transferred all of its assets
and business operations to SaaSMAX Corp., the Company’s wholly-owned subsidiary (the “Subsidiary”), in exchange
for the Subsidiary assuming all of the Company’s indebtedness at that date, other than Convertible Notes totaling $225,000.
On July 10, 2013, the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Dina Moskowitz,
the Company’s sole Executive Officer and Director whereby Ms. Moskowitz cancelled 25,880,448 of her common shares of the
Company, in consideration for her acquisition of all of the issued and outstanding common shares of the Subsidiary. See further
discussion in Note 2 – Discontinued Operations.
Effective July 9, 2013 the Company entered into
a distribution agreement with California Clean Air Technologies, LLC, a Nevada limited liability company (“CCAT”),
and we are now focusing our business operations on the marketing, selling and distribution of a propane diesel dual fuel retrofit
system (“DFRS Products”) owned by CCAT (“continuing operations”).
Going concern
As at June 30, 2014, we had current assets of
$296, comprising of cash, and current liabilities of $89,329, resulting in a working capital deficit of $89,033. We had neither
the funds nor an established profitable business to finance payment of our liabilities in the normal course of business or our
ongoing business plan. No assurance can be given that the Exclusive Distributor Agreement (see Note 4) with CCAT will be successful
and result in profits for the Company. Our business plan requires that we raise additional capital to fund our operations throughout
2014 and there can be no assurance that we will be able to raise any or all of the capital required. We have generated no revenue
from our operations as a distributor of DRFS Products and have incurred a net loss of $52,183 and net cash used in operating activities
of $14,374 during the six months ended June 30, 2014. We will have to obtain additional funding from the sale of our securities,
the sale of debt instruments or from strategic transactions in order to fund our current level of operations and there can be no
assurance that we will be able to raise any or all of the capital required. If the Company is unable to generate sufficient cash
flow from operations and, or, continue to obtain financing to meet its working capital requirements, it may have to curtail its
business sharply or cease business altogether.
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern that contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. However, the ability of the Company to continue as a going concern on a longer-term
basis will be dependent upon the ability to generate sufficient cash flow from operations to meet its obligations on a timely basis,
the ability to successfully raise additional financing, and the ability to ultimately attain profitability.
Basis of presentation
The accompanying
unaudited consolidated financial statements of SaaSMAX have been prepared in accordance with accounting principles generally accepted
in the United States for interim financial information and applicable regulations of the U.S. Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles
generally accepted in the United States have been omitted pursuant to such rules and regulations. In the opinion of management,
all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of financial position
and results of operations have been included. Our operating results for the three and six months ended June 30, 2014 are not necessarily
indicative of the results that may be expected for the year ending December 31, 2014. The accompanying unaudited consolidated financial
statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2013,
which are included in our Annual Report on Form 10-K.
The accompanying consolidated financial statements
reflect the accounts of SaaSMAX and its wholly owned subsidiaries. All significant inter-company balances and transactions have
been eliminated.
Development stage company
We are a development stage company as defined
by section 915-10-20 of the FASB Accounting Standards Codification and among the additional disclosures required as a development
stage company are that our financial statements are identified as those of a development stage company, and that the statements
of operations, stockholders’ equity (deficit) and cash flows disclose activity since the date of its inception (January 19,2011)
as a development stage company Effective June 10, 2014 FASB changed its regulations with respect to Development Stage Entities
and these additional disclosures are no longer required for annual reporting periods beginning after December 15, 2014 with the
option for entities to early adopt these new provisions. We have not elected to early adopt these provisions and consequently these
additional disclosures are included in these financial statements.
Revenue recognition
Upon the generation of revenue, the Company
shall follow the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin 104 for revenue recognition.
The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable
and earned when it has persuasive evidence of an arrangement that the services have been rendered to the customer, the sales price
is fixed or determinable, and collectability is reasonably assured. Deferred revenues shall be recorded when cash has been collected,
however the related service has not yet been provided.
Use of estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash
For purposes of the balance sheet and statement
of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or
less to be cash equivalents.
Fair value estimates
Pursuant to the Accounting Standards Codification
(“ASC”) No. 820, “Disclosures About Fair Value of Financial Instruments”, the Company records its
financial assets and liabilities at fair value. ASC No. 820 provides a framework for measuring fair value, clarifies the definition
of fair value and expands disclosures regarding fair value measurements. ASC No. 820 establishes a three-tier hierarchy, which
prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1—Inputs
are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2—Inputs
(other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through
correlation with market data at the measurement date and for the duration of the asset/liability’s anticipated life.
Level 3—Inputs
reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement
date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
The fair value of a financial instrument is
the amount for which the instrument could be exchanged in a current transaction between willing parties. Cash, accounts payable,
accrued expenses and loan payable approximate fair value because of the short maturity of these instruments. The Company currently
has no other financial assets or liabilities that are measured at fair value.
The Company’s non-financial assets, which
consist of an Exclusive Distributor Agreement (see Note 4), are not required to be measured at fair value on a recurring basis.
However, if certain triggering events occur, or if an annual impairment test is required and the Company is required to evaluate
the non-financial asset for impairment, a resulting asset impairment would require that the non-financial asset be recorded at
the fair value.
Net loss per common share
Net loss per common share is computed
pursuant to ASC No. 260 “Earnings Per Share”. Basic net loss per share is computed by dividing net loss by the weighted
average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net
loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period.
Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.
Recently issued accounting pronouncements
We have reviewed all recently issued,
but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected
to cause a material impact on our financial condition or the results of its operations other than in respect of the new regulations
relating to Development Stage Entities as discussed above.
NOTE 2 – DISCONTINUED OPERATIONS
As a result of the Share Exchange Agreement
entered into on July 10, 2013, with Ms. Moskowitz, all assets and liabilities, other than Convertible Notes totaling $225,000,
of the Subsidiary were sold to Ms. Moskowitz. The operations relating to that business prior to July 1, 2013 are reported as discontinued
operations in the accompanying consolidated statements of operations.
The components of the discontinued operations
are as follows:
| |
Three months ended June 30, 2013 | |
Six months ended June 30, 2013 | |
January 19, 2011 (inception) to June 30, 2014 |
| |
| | | |
| | | |
| | |
Revenues | |
$ | 4,250 | | |
$ | 6,628 | | |
$ | 11,166 | |
Cost of services | |
| 3,102 | | |
| 4,825 | | |
| 6,615 | |
Gross profit | |
| 1,148 | | |
| 1,803 | | |
| 4,551 | |
Operating expenses | |
| | | |
| | | |
| | |
Salaries and professional fees | |
| 25,698 | | |
| 84,409 | | |
| 472,036 | |
Technology and development | |
| 2,186 | | |
| 19,285 | | |
| 155,034 | |
General and administrative | |
| 20,100 | | |
| 44,983 | | |
| 147,013 | |
Total operating expenses | |
| 47,894 | | |
| 148,677 | | |
| 774,083 | |
Loss from operations | |
| (46,836 | ) | |
| (146,874 | ) | |
| (769,532 | ) |
Other expense | |
| | | |
| | | |
| | |
Interest expense | |
| 60,423 | | |
| 102,636 | | |
| 140,173 | |
Legal settlement | |
| 24,000 | | |
| 24,000 | | |
| 24,000 | |
Total other expense | |
| 84,423 | | |
| 126,636 | | |
| 164,173 | |
Net loss | |
$ | (131,259 | ) | |
| (273,510 | ) | |
$ | (933,705 | ) |
| |
| | | |
| | | |
| | |
NOTE 3 – RELATED PARTY TRANSACTIONS
As of June 30, 2014, a shareholder of the Company
has loaned us $20,000 for working capital needs. The loans accrue interest at 10% per annum, compounded annually, and have no maturity
date.
On July 22, 2013, the Company entered into consulting
agreements with Mr. Rainer, to act as Director, Chief Financial Officer, Secretary and Treasurer of the Company and Mr. Moll, to
act as Director, Chief Executive Officer and President of the Company (the “Consultant(s)”). The consulting agreements
were to continue until July 21, 2023, subject to earlier termination as provided in the consulting agreements. During the term
of the consulting agreements, and subject to the Company completing equity financing totaling not less than $1,000,000 the Company
shall pay each of the Consultant a base consulting fee of $5,000 per month in consideration of their services.
Effective February 4, 2014, Harold C. Moll resigned
as our Chief Executive Officer, President and as a Director. The resignations of Mr. Moll were not due to or caused by any disagreement
with us, related to our operations, policies, practices or otherwise. Rob Rainer, our Chief Financial Officer, Secretary and Treasurer
and a Director, was appointed our Chief Executive Officer and President to fill the vacancies resulting from Mr. Moll’s resignations.
In connection with Mr. Moll’s resignation,
Mr. Moll agreed to terminate his Management Consulting Agreement dated July 22, 2013 and surrender for cancellation to us the 9,000,000
Earn-Out Shares issued to him under his management consulting agreement. In addition, Mr. Moll agreed to transfer 7,262,304 shares
of our common stock held by him to Rob Rainer.
See also Note 5 regarding Earn-Out Shares granted
to the Consultants.
NOTE 4 – EXCLUSIVE DISTRIBUTOR AGREEMENT
The Company entered into an agreement dated
July 9, 2013 (the “Exclusive Distributor Agreement”) with California Clean Air Technologies, LLC, a Nevada limited
liability company (“CCAT”) whereby the Company obtained the exclusive distribution rights in Canada (non-exclusive
for British Columbia, Alberta and Saskatchewan) to market, sell and distribute a propane diesel duel fuel retrofit system (“DFRS
Products”) owned by CCAT.
CCAT is a Southern California-based developer,
marketer and distributor of diesel engine retrofit products, including a patent-pending Propane Diesel Dual-Fuel Retrofit SystemTM
(“DFRS”). DFRS is a retrofit system that demonstrates high (approximately 50%) substitution rates of propane fuel for
diesel fuel without loss of power or torque, while exhibiting very low emissions of pollutants, such as hydrocarbons (HC), nitrogen
oxides (NOx), carbon monoxide (CO), and particulate matter (PM or soot).
The Exclusive Distributor Agreement is for a
term of five (5) years unless sooner terminated in accordance with the provisions of the Exclusive Distributor Agreement. The
Company has the right to extend the Agreement for an additional five (5) year term, if it is in compliance with the Minimum Royalty
requirements described below.
Under the terms of the Exclusive Distributor
Agreement, as consideration for the exclusive distribution rights, the Company (i) issued 300,000 shares of its common stock to
CCAT, and (ii) issued a promissory note in the principal amount of $50,000 payable without interest on July 30, 2013. The
promissory note has been paid in full as of December 31, 2013. As additional consideration for the Exclusive Distributor Agreement,
the Company will pay to CCAT a royalty of $750 per sale of DFRS Products. CCAT will have the exclusive rights to install
the DFRS Products at a fixed price between $2,500 and $5,000, depending on the size of the engine. CCAT may, on 30 days written
notice, terminate the Exclusive Distributor Agreement if the Company fails to achieve sufficient sales to generate Minimum Royalties
of $22,500 (Year 1), $37,500 (Year 2), $60,000 (Year 3), $82,500 (Year 4), and $105,000 (Year 5).
The Exclusive Distributor Agreement was valued
by the Company at $62,500 and is being amortized over the 5 year term. Amortization expense totaling $3,690 and $6,111 is included
in the accompanying statements of operations for the three and six months ended June 30, 2014.
NOTE 5 – STOCKHOLDERS’ EQUITY
Effective April 16, 2014 the Company completed
a 12:1 forward stock split. All numbers for shares of common stock disclosed in these financial statements have been retrospectively
restated for this forward stock split.
On July 8, 2013, as consideration for the acquisition
of all of the issued and outstanding common shares of the Subsidiary, Ms. Moskowitz cancelled 25,880,448 of her common shares of
the Company. The shares were valued at $0.042 per share or $1,078,352 based on the most recent sale of our common stock to accredited
investors.
On July 9, 2013, we issued 300,000 shares of
our common stock, valued at $12,500, to CCAT as part consideration of the exclusive distribution rights granted by CCAT to the
Company. The shares were issued pursuant to Rule 506 of Regulation D of the Securities Act and CCAT has represented that it is
an “accredited investor” as defined in Regulation D of the Securities Act.
On July 18, 2013, we issued an aggregate of
9,642,888 shares of our common stock as payment for $225,000 of Convertible Notes.
On July 22, 2013, we issued a total of 18,000,000
shares of our common stock (the “Earn-Out Shares”) to both Mr. Moll and Mr. Rainer under the terms of their consulting
agreements. The Earn-Out Shares are held in the custody of the Company and will be released on the basis of 10% of the original
number of Earn-Out Shares on each anniversary of the consulting agreements. The Earn-Out Shares are not beneficially owned by Mr.
Moll or Mr. Rainer until they are released to them on the respective anniversary dates. The Earn-Out Shares may not be sold, transferred
or pledged, and are subject to forfeiture under the termination provisions of the management consulting agreements. The Earn-Out
Shares were valued at $750,000 based on the grant date fair value and are included in additional paid in capital as deferred compensation.
During the three and six months ended June 30, 2014, we recognized $9,375 and $18,750 of stock based compensation related to the
Earn-Out Shares, which is included in professional fees in the accompanying condensed consolidated statements of operations.
As discussed above in Note 3 – Related
Party Transactions, Mr. Moll resigned his positions effective February 4, 2014 and his 9,000,000 Earn-Out Shares were cancelled.
As a result of the cancellation, we recognized a gain in the amount of $18,750 which is included in other income in the accompanying
condensed consolidated statements of operations for the six months ended June 30, 2014.
During August 2013, the Company received proceeds
totaling $100,000 from the sale of 2,400,000 shares of our common stock and granted 1,200,000 shares of common stock, valued at
$50,000, as payment in full of the $50,000 promissory note issued for the Exclusive Distributor Agreement.
NOTE 6 –STOCK INCENTIVE PLAN
In accordance with the Company’s 2011
Stock Incentive Plan, (the “Plan”), we are authorized to grant up to 12,000,000 shares of common stock, stock options
intended to qualify as Incentive Stock Options, “ISO”, under Section 422 of the Internal Revenue Code of 1986, as amended,
non-qualified options and stock appreciation rights to our employees, officers, directors and consultants. As a result of the Share
Exchange Agreement, on May 17, 2013 we notified all of our option holders, holding a total of 5,301,660 stock options, that their
options were being cancelled as they relate to discontinued operations.
NOTE 7 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events
from the balance sheet date through the date the financial statements were issued and determined there are no items to disclose
other than as follows:
Related Party Loan
On July 29, 2014, a shareholder of the Company
loaned us $5,000 for working capital needs. The loan accrues interest at 10% per annum, compounded annually, and has no maturity
date.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this Quarterly
Report on Form 10-Q constitute "forward-looking statements.” These statements, identified by words such as “plan,”
"anticipate,” "believe,” "estimate,” "should,” "expect" and similar expressions
include our expectations and objectives regarding our future financial position, operating results and business strategy. These
statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other
factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those
described in the forward-looking statements. Such risks and uncertainties include those set forth under the caption "Part
II, Item 1A. Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. We advise you to carefully review the reports
and documents we file from time to time with the United States Securities and Exchange Commission (the “SEC”), particularly
our periodic reports filed with the SEC pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”).
OVERVIEW
We were incorporated on January 19, 2011 under
the laws of the State of Nevada. We were formerly developing and launching an online business-to-business marketplace and channel
management tools for the rapidly growing software-as-a-service ("SaaS") market (the “SaaSMAX Marketplace”).
We have decided to shift our business operations to the marketing, selling and distribution of a propane diesel dual fuel retrofit
system (“DFRS Products”) owned by California Clean Air Technologies, LLC, a Nevada limited liability company (“CCAT”).
Since our departure from the SaaS industry and
our venture into the diesel retrofit industry. We have commenced our marketing operations for the DFRS Products. We engaged a marketing
consultant (the “Canadian Consultant”) and paid $15,000 for marketing services during our 2013 fiscal year.
Our Canadian Consultant has been attending installations
of the DFRS Products in the United States in preparation for potential sales and installations in Canada.
Exclusive Distributor Agreement
We entered into an agreement dated July 9, 2013
(the “Exclusive Distributor Agreement”) with CCAT for the exclusive distribution rights in Canada (non-exclusive for
British Columbia, Alberta and Saskatchewan) to market, sell and distribute DFRS Products owned by CCAT. See “Exclusive Distributor
Agreement” below.
CCAT and DFRS Products
CCAT is a Southern California-based developer,
marketer and distributor of diesel engine retrofit products, including a patent-pending Propane Diesel Dual-Fuel Retrofit SystemTM
(“DFRS”). DFRS is a retrofit system that demonstrates high (approximately 50%) substitution rates of propane fuel for
diesel fuel without loss of power or torque, while exhibiting very low emissions of pollutants, such as hydrocarbons (HC), nitrogen
oxides (NOx), carbon monoxide (CO), and particulate matter (PM or soot).
In November 2011, the California Air Resource
Board (“CARB”) awarded CCAT an Alternative Fuel Certification for a dual-fuel device. CARB is a widely recognized global
leader in air quality regulations and related research. CARB certification is recognized by the US EPA and all 50 states.
The national market contains approximately 16
million potential engines to be retrofitted on-road and 4.4 million off-road. CCAT’s initial business focus is to sell to
the off-road mobile and stationary markets where it believes it has no serious competition.
Acquisition of CCAT
We are also negotiating to acquire CCAT. The
proposed acquisition would involve the issuance of a very large number (control block) of our common shares to CCAT’s owners
and would be conditional on us having available significant financing for the development of CCAT’s business. The exact terms
of the proposed acquisition have not been established. There is no assurance that the negotiations will be successful or that we
will be able to raise the necessary funding for CCAT’s business.
Recent Corporate Developments
We experienced the following Corporate Developments
since the filing of our Form 10-K for the year ended December 31, 2013:
Amendment To Articles Of Incorporation
Effective April 16, 2014, we amended our Articles
of Incorporation in accordance with Article 78.207 of Chapter 78 of the Nevada Revised Statutes by increasing our issued and authorized
common stock on a twelve-for-one basis (the “Stock Split”). Accordingly, our authorized common stock was increased
from 100,000,000 shares, par value $0.001 per share, to 1,200,000,000 shares, par value $0.001 per share and our issued and outstanding
shares of common stock increased correspondingly from 4,151,574 shares to 49,818,888 shares.
As a result of the Stock Split, our common stock
will trade under the symbol “SAAXD” for a period of 20 trading days beginning April 16, 2014. After 20 trading days,
the “D” will be removed from our symbol.
A copy of our filed stamped Certificate of Change
to its authorized capital is attached as an exhibit to our Current Report on Form 8-K, filed with the SEC on April 17, 2014.
RESULTS OF OPERATIONS
Three months Summary
| |
Three Months Ended June 30, | |
Percentage Increase / (Decrease) |
| |
2014 | |
2013 | |
|
Operating Expenses | |
$ | 36,980 | | |
$ | — | | |
| 100.0 | % |
Loss from Operations | |
| (36,980 | ) | |
| — | | |
| 100.0 | % |
Other Expense | |
| | | |
| | | |
| | |
Loss from Discontinued Operations | |
| — | | |
| (131,259 | ) | |
| (100.0 | )% |
Total Other Expenses | |
| — | | |
| (131,259 | ) | |
| (100.0 | )% |
Net Loss | |
$ | (36,980 | ) | |
$ | (131,259 | ) | |
| 71.8 | % |
Six months Summary
| |
Six Months Ended June 30, | |
Percentage Increase / (Decrease) |
| |
2014 | |
2013 | |
|
Operating Expenses | |
$ | 70,933 | | |
$ | — | | |
| 100.0 | % |
Loss from Operations | |
| (70,933 | ) | |
| — | | |
| 100.0 | % |
Other Income (Expense) | |
| | | |
| | | |
| | |
Gain on cancellation of Earn-Out Shares | |
| 18,750 | | |
| — | | |
| 100.0 | % |
Loss from Discontinued Operations | |
| — | | |
| (273,510 | ) | |
| (100.0 | )% |
Total Other Income (Expenses) | |
| 18,750 | | |
| (273,510 | ) | |
| 113.2 | % |
Net Loss | |
$ | (15,203 | ) | |
$ | (273,510 | ) | |
| 89.3 | % |
Revenues
We have not recognized any revenues since shifting
our business operations to the marketing, selling and distribution of DFRS Products in July 2013. We expect to generate revenue
with our acquisition of the rights to sell the DFRS Products. However, we do not currently have any sales or revenue history with
respect to the DFRS Products or the diesel retrofit industry. As such, there is no assurance that our business efforts in this
area will prove to be successful.
Operating Costs and Expenses
Our operating expenses consisted of $36,980
during the three months ended June 30, 2014. Our operating expenses consisted of consisted of professional fees of $32,204 and
general administrative expenses of $4,775 for the three months ended June 30, 2014.
Our operating expenses consisted of $70,933
during the six months ended June 30, 2014. Our operating expenses consisted of consisted of professional fees of $60,891 and general
administrative expenses of $10,042 for the six months ended June 30, 2014.
Professional fees relate to fees associated
with legal and accounting fees resulting from the filing requirements necessary for a public company.
General and administrative expenses primarily
relate to management fees, regulatory expenses, depreciation, Internet services, travel, entertainment, automotive and office expenses.
We expect our operating expenses to change with
our departure from the SaaS industry and our venture into the diesel retrofit industry. As such, our previous results of operations
will not be indicative of our future results of operations.
Loss from Discontinued Operations
During the three months ended June 30, 2013,
we recorded loss from discontinued operations of $131,259 and during the six months ended June 30, 2013 we recorded loss from discontinued
operations of $273,510. Loss from discontinued operations consists of our operating activities prior to our departure from the
SaaS industry and our venture into the diesel retrofit industry.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital
| |
June 30 2014 | |
December 31, 2013 | |
Percentage Increase / (Decrease) |
Current Assets | |
$ | 296 | | |
$ | 4,670 | | |
| (93.7 | %) |
Current Liabilities | |
| (89,329 | ) | |
| (47,631 | ) | |
| 87.5 | % |
Working Capital Deficit | |
$ | (89,033 | ) | |
$ | (42,961 | ) | |
| (51.7 | %) |
Cash Flows
| |
Six Months Ended June 30, 2014 |
Cash Flows Used In Operating Activities | |
$ | (14,374 | ) |
Cash Flows Used In Investing Activities | |
| — | |
Cash Flows Provided By Financing Activities | |
| 10,000 | |
Net Decrease In Cash During Period | |
$ | (4,374 | ) |
Our only source of financing for the six-month
period ended June 30, 2014 were short-term loans from a shareholder. The notes bear interest at 10% per annum and are payable on
demand.
Our plan of operation calls for us to spend
significantly more than our current capital resources or the amount of financing that we have been able to obtain to date. Any
substantial financing that we are able to obtain is expected to be in the form of equity financing.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
CRITICAL ACCOUNTING POLICIES
There are no material changes to the critical
accounting policies and estimates described in the audited financial statements for the period ended December 31, 2013 included
in our Annual Report on Form 10-K filed with the SEC.
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK.
As a "smaller reporting company" as
defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Based upon an evaluation of the effectiveness
of our disclosure controls and procedures performed by our Chief Executive Officer as of the end of the period covered by this
report, our Chief Executive Officer, concluded that our disclosure controls and procedures have not been effective as a result
of a weakness in the design of internal control over financial reporting identified below.
We identified material weaknesses in our internal
control over financial reporting primarily attributable to (i) lack of segregation of incompatible duties; and (ii) insufficient
Board of Directors representation. These weaknesses are due to our inadequate staffing during the period covered by this report
and our lack of working capital to hire additional staff. Management has retained an outside, independent financial consultant
to record and review all financial data, as well as prepare our financial reports, in order to mitigate this weakness. Although
management will periodically re-evaluate this situation, at this point it considers that the risk associated with such lack of
segregation of duties and the potential benefits of adding employees to segregate such duties are not cost justified. We intend
to hire additional accounting personnel to assist with financial reporting as soon as our finances will allow.
Changes in Internal Controls Over Financial
Reporting
There have been no changes in our internal controls
over financial reporting that occurred during the quarterly period covered by this report that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item
1. Legal Proceedings.
On June 3, 2013, we entered into a settlement
agreement (the “Settlement Agreement”) with Tony Osibov (“Osibov”) settling all outstanding claims between
Osibov and us. As consideration for the Settlement Agreement, we agreed to pay Mr. Osibov $24,000 of which $15,000 had been paid
as of June 30, 2013 and $9,000 remained in accounts payable, which was divested pursuant to the Share Exchange Agreement. Mr. Osibov
agreed to sell his 300,000 shares of our common stock to unaffiliated third parties for $6,000 within 30 days from the date of
the Settlement Agreement. Additionally, Mr. Osibov relinquished us and Ms. Moskowitz our former CEO from any and all rights that
he has alleged that he has to any of our intellectual property, which we subsequently divested, except for the relinquishment of
the PHP object oriented application backup system for creating application programming interfaces, called PHPMC.
Item
1A. RISK FACTORS.
The following are certain risk factors that
could affect our business, financial position, results of operations or cash flows. These risk factors should be considered along
with the forward-looking statements contained in this Quarterly Report on Form 10-Q because these factors could cause our
actual results or financial condition to differ materially from those projected in forward-looking statements. The following discussion
is not an all-inclusive listing of risks, although we believe these are the more material risks that we face. If any of the following
occur, our business, financial position, results of operations or cash flows could be negatively affected. We caution the reader
to keep these risk factors in mind and refrain from attributing undue certainty to any forward-looking statements, which speak
only as of the date of this Quarterly Report.
We are reliant on CCAT to produce the DFRM
products.
The DRFM Products are controlled by the CCAT
and we cannot produce the DRFM products on our own. We are currently restricted to the manufacturing capacity of CCAT or it’s
agents.
We have a lack of operating history in the
diesel retrofit industry and there is no assurance that our business efforts in this field will be successful.
With our entry into the Exclusive Distribution
Agreement with CCAT, we are embarking on a change of business. Although our sole director and executive officer has extensive business
experience, he does not have experience in the diesel retrofit industry. Many of our competitors will have greater experience and/or
greater financial resources than we do at this time. We intend to hire sales and consulting teams with experience in the diesel
retrofit industry. However, there is no assurance that our business efforts in the diesel retrofit industry will prove successful.
Demand for and supply of our products and
services may be adversely affected by several factors, some of which we cannot predict or control, that could adversely affect
our financial position, results of operations or cash flows.
The demand for our products and services could
be affected by several factors, including:
| · | Economic downturns in the markets in which we sell our products; |
| · | Competition from retrofit products; |
| · | Changes in customer preferences; |
| · | Product obsolescence or technological changes that render our products
less desirable to use or more expensive to produce; |
| · | Changes in environmental regulations that may make our products illegal
to sell in their present form; |
| · | Inability of our supplier to obtain raw materials used in production
due to factors such as work stoppages, shortages or supplier plant shutdowns; and |
| · | Inability to supply products due to factors such as work stoppages,
plant shutdowns or regulatory changes and exogenous factors, like severe weather. |
If any of these events occur, the demand for
and supply of our products and services could suffer, which could have a material adverse affect on our financial position, results
of operations and cash flows.
We face competition from other diesel retrofit
companies, which could adversely affect our sales, results of operations or cash flows.
We compete with companies that produce similar
products and with companies that produce different products that are designed for the same end uses. We encounter competition based
on several key criteria, including product performance and quality, product price, product availability and security of supply,
responsiveness of product development in cooperation with customers and customer service.
We expect that our competitors will continue
to develop and introduce new and enhanced products, which could cause a decline in the market acceptance of our products. In addition,
our competitors could cause a reduction in the selling prices of some of our products as a result of intensified price competition.
Competitive pressures can also result in the loss of major customers. An inability to compete successfully could have an adverse
effect on our financial position, results of operations or cash flows.
We may also experience increased competition
from companies that offer products based on alternative technologies and processes that may be more competitive or better in price
or performance, causing us to lose customers and result in a decline in our sales volume and earnings.
Additionally, some of our customers may already
be or may become large enough to justify developing in-house production capabilities. Any significant reduction in customer orders
as a result of a shift to in-house production could adversely affect our future sales and operating prospects.
Current and future disruptions in the global
credit and financial markets could limit our access to financing, which could negatively impact our business.
Domestic and foreign credit and financial markets
have experienced extreme disruption in the past three years, including volatility in security prices, diminished liquidity and
credit availability, declining valuations of certain investments and significant changes in the capital and organizational structures
of certain financial institutions. We are unable to predict the likely duration and severity of the continuing disruption in the
credit and financial markets or of any related adverse economic conditions. These market conditions may limit our ability to access
the capital necessary to grow and maintain our business. Accordingly, we may be forced to delay raising capital, issue shorter
tenors than we prefer or pay unattractive interest rates, which could increase our interest expense, decrease our profitability
and significantly reduce our financial flexibility. Overall, our results of operations, financial condition and cash flows could
be materially adversely affected by the disruptions in the global credit and financial markets.
Because
our stock is a penny stock, stockholders will be more limited in their ability to sell their stock.
The SEC has adopted rules that regulate broker-dealer
practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than
$5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system.
Because our securities constitute "penny
stocks" within the meaning of the rules, the rules apply to us and to our securities. The rules may further affect the ability
of owners of shares to sell our securities in any market that might develop for them. As long as the quotation price of our common
stock is less than $5.00 per share, the common stock will be subject to Rule 15g-9 under the Exchange Act. The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by
the SEC, that:
| 1. | contains a description of the nature and level of risk in the market
for penny stocks in both public offerings and secondary trading; |
| 2. | contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements
of securities laws; |
| 3. | contains a brief, clear, narrative description of a dealer market,
including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; |
| 4. | contains a toll-free telephone number for inquiries on disciplinary
actions; |
| 5. | defines significant terms in the disclosure document or in the conduct
of trading in penny stocks; and |
| 6. | contains such other information and is in such form, including language,
type, size and format, as the SEC shall require by rule or regulation. |
The broker-dealer also must provide, prior to
effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation
of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or
other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements
showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior
to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written
suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market
for our stock.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.
No unregistered share were sold during the three
and six months ended June 30, 2014 or 2013.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
No senior securities were issued or outstanding during the three
and six months ended June 30, 2014 or 2013.
ITEM 4. MINE
SAFETY DISCLOSURES.
Not applicable
ITEM 5. OTHER
INFORMATION.
None.
ITEM 6. EXHIBITS.
The following exhibits are either provided with
this Quarterly Report or are incorporated herein by reference:
Exhibit
Number |
Description
of Exhibit |
3.1 |
Articles of Incorporation.(1) |
3.2 |
Bylaws.(1) |
3.3 |
Bylaw No. 2A to Article III - Directors.(5) |
3.4 |
Certificate of Change Pursuant to NRS 78.209.(7) |
4.1 |
Stock Incentive Plan.(2) |
10.1 |
Stock Incentive Plan.(2) |
10.2 |
Convertible Promissory Note for $25,000 dated July 1, 2012, amended January 23, 2013.(3) |
10.3 |
Convertible Promissory Note for $25,000 dated August 15, 2012, amended January 23, 2013.(3) |
10.4 |
Convertible Promissory Note for $25,000 dated September 26, 2012, amended January 23, 2013.(3) |
10.5 |
Convertible Promissory Note for $25,000 dated October 26, 2012, amended January 23, 2013.(3) |
10.6 |
Convertible Promissory Note for $25,000 dated December 6, 2012, amended January 23, 2013.(3) |
10.7 |
Convertible Promissory Note for $25,000 dated January 9, 2013, amended January 23, 2013.(3) |
10.8 |
Convertible Promissory Note for $25,000 dated February 23, 2013.(3) |
10.9 |
Letter dated January 24, 2013 confirming maturity dates of amended convertible notes.(3) |
10.10 |
Exclusive Distributor Agreement dated July 9, 2013 between the Company and California Clean Air Technologies, LLC.(4) |
10.11 |
Promissory Note in favor of California Clean Air Technologies, LLC in the principal amount of $50,000.(4) |
10.12 |
Asset Purchase Agreement dated July 1, 2013 between the Company and its wholly-owned subsidiary, SaaSMAX Corp.(4) |
10.13 |
Share Exchange Agreement dated July 10, 2013 between the Company and Dina M. Moskowitz for the transfer of shares of the Company’s wholly-owned subsidiary, SaaSMAX Corp.(4) |
10.14 |
Management Consulting Agreement dated July 22, 2013 between the Company and Harold C. Moll.(5) |
10.15 |
Management Consulting Agreement dated July 22, 2013 between the Company and Rob Rainer.(5) |
10.16 |
Termination of Management Consulting Agreement and Cancellation of Earn-Out Shares between the Company and Harold C. Moll dated February 4, 2014.(6) |
10.7 |
Mutual release between the Company and Harold C. Moll dated February 4, 2014.(6) |
21.1 |
List of Subsidiaries. (8) |
31.1 |
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 |
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS |
XBRL Instance Document. |
101.SCH |
XBRL Taxonomy Extension Schema. |
101.CAL |
XBRL Taxonomy Extension Calculation Linkbase. |
101.DEF |
XBRL Taxonomy Extension Definition Linkbase. |
101.LAB |
XBRL Taxonomy Extension Label Linkbase. |
101.PRE |
XBRL Taxonomy Extension Presentation Linkbase. |
| (1) | Filed as an exhibit to our Registration Statement on Form S-1 filed
on May 23, 2011. |
| (2) | Filed as an exhibit to our Registration Statement on Form S-1/A
filed on August 15, 2011. |
| (3) | Filed as an exhibit to our Current Report on Form 8-K filed on April
17, 2013. |
| (4) | Filed as an exhibit to our Current Report on Form 8-K filed on July
15, 2013. |
| (5) | Filed as an exhibit to our Current Report on Form 8-K filed on July
25, 2013. |
| (6) | Filed as an exhibit to our Current Report on Form 8-K filed on February
6, 2014 |
| (7) | Filed as an exhibit to our Current Report on Form 8-K filed on April
17, 2014 |
| (8) | Filed as an exhibit to our Quarterly Report on Form 10-Q filed on
May 20, 2014 |
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
SaaSMAX,
INC. |
|
|
By: |
/s/ Rob Rainer |
Name: |
ROB RAINER
|
Title: |
Chief Executive Officer and Chief Financial Officer, President,
Secretary and Treasurer (Principal Chief Executive Officer and Principal Financial Officer) |
Date:
|
August 19, 2014 |
Exhibit
31.1
CERTIFICATIONS
I, Rob Rainer, certify that;
| (1) | I have reviewed this Quarterly Report on Form 10-Q of SaaSMax Inc.; |
| (2) | Based on my knowledge, this report does not
contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| (3) | Based on my knowledge, the financial statements,
and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| (4) | The registrant’s other certifying officer(s)
and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the
registrant and have: |
| a) | Designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared; |
| b) | Designed such internal control over financial
reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s
disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the
registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and |
| (5) | The registrant’s other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material
weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect
the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that
involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
| | ___________________________________ |
By: Rob Rainer
| Title: | Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer |
Exhibit
32.1
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Rob Rainer, the Chief Financial Officer of
SaaSMAX, Inc. (the “Company”), hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
| (i) | the Quarterly Report on Form 10-Q of the
Company, for the fiscal quarter ended June 30, 2014, and to which this certification is attached as Exhibit 32.2 (the “Report”)
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| (ii) | the information contained in the Report fairly
presents, in all material respects, the financial condition and results of operations of the Company. |
By: |
/s/ Rob Rainer
|
Name: |
ROB RAINER
|
Title: |
Chief Executive Officer and Chief Financial Officer, President Secretary
and Treasurer
|
Date:
|
August 19, 2014 |
A
signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company
and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
This certification accompanies the Form
10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference
into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or
after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.
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